FISCAL NOTE

Date Requested: January 29, 2016
Time Requested: 11:09 AM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2025 Introduced HB4305
CBD Subject: Motor Vehicles


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    
    The stated purpose of this bill is to allow transportation network companies to operate in the state and to specify requirements and limitations with relation to such operations.
    
    The provisions of this bill would allow transportation network companies to operate in West Virginia under certain guidelines. This fiscal note only addresses the tax consequences to the State General Revenue Fund and does not address fiscal consequences related to the regulatory oversight provided by the Division of Motor Vehicles.
    
    According to our interpretation, passage of this bill would potentially result in additional transportation service options in some areas of the State. This bill provides that such services would be exempt from local user fees, local registration fees, and municipal business and occupation taxes. The bill also provides that such services would be exempt from the general State and local sales tax. Such an exemption would parallel existing exemptions for other forms of intrastate and interstate transportation. For example, taxi cab services are excluded from the sales tax due to regulatory oversight by the Public Service Commission. The provisions of the bill also provide conflicting statements regarding sales tax treatment of purchases by drivers for use in transportation (e.g., tires, batteries, car wax, and maintenance services). Proposed Section 17-29-19(d)(2) would provide a refundable direct use sales tax exemption for purchases related to transportation and proposed Section 17-29-19(e)(6) would provide that drivers may not assert the refundable sales tax exemption for purchases used in transportation. Such a sales tax exemption does not likely exist in other states because of the complexity associated with attempts to separate personal use from business use. If the intent of the bill is to provide a transportation network company driver with a sales tax exemption for purchases related to their vehicle, a driver proving a single trip in a year could potentially enjoy a significant tax advantage over other drivers who pay sales taxes on their vehicle maintenance costs. Such a tax provision could result in a loss of State and local sales tax revenues of some significance. There should be some enhancement of income and associated income tax receipts associated with this new activity. We are unable to readily quantify the potential increase in income tax receipts. However, the increase in income and tax receipts would likely be modest given population patterns in this State.
    
    Additional administrative costs incurred by the State Tax Department would be $14,800 in FY2017 and each year thereafter. Most of these costs relate to sales tax exemption administration.
    
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 14,800 14,800
Personal Services 0 10,000 10,000
Current Expenses 0 500 500
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 4,300 4,300
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    .The provisions of this bill would allow transportation network companies to operate in West Virginia under certain guidelines. This fiscal note only addresses the tax consequences to the State General Revenue Fund and does not address fiscal consequences related to the regulatory oversight provided by the Division of Motor Vehicles.
    
    According to our interpretation, passage of this bill would potentially result in additional transportation service options in some areas of the State. This bill provides that such services would be exempt from local user fees, local registration fees, and municipal business and occupation taxes. The bill also provides that such services would be exempt from the general State and local sales tax. Such an exemption would parallel existing exemptions for other forms of intrastate and interstate transportation. For example, taxi cab services are excluded from the sales tax due to regulatory oversight by the Public Service Commission. The provisions of the bill also provide conflicting statements regarding sales tax treatment of purchases by drivers for use in transportation (e.g., tires, batteries, car wax, and maintenance services). Proposed Section 17-29-19(d)(2) would provide a refundable direct use sales tax exemption for purchases related to transportation and proposed Section 17-29-19(e)(6) would provide that drivers may not assert the refundable sales tax exemption for purchases used in transportation. Such a sales tax exemption does not likely exist in other states because of the complexity associated with attempts to separate personal use from business use. If the intent of the bill is to provide a transportation network company driver with a sales tax exemption for purchases related to their vehicle, a driver proving a single trip in a year could potentially enjoy a significant tax advantage over other drivers who pay sales taxes on their vehicle maintenance costs. Such a tax provision could result in a loss of State and local sales tax revenues of some significance. There should be some enhancement of income and associated income tax receipts associated with this new activity. We are unable to readily quantify the potential increase in income tax receipts. However, the increase in income and tax receipts would likely be modest given population patterns in this State.
    
    Additional administrative costs incurred by the State Tax Department would be $14,800 in FY2017 and each year thereafter. Most of these costs relate to sales tax exemption administration.
    
    
    
    



Memorandum


    The stated purpose of this bill is to allow transportation network companies to operate in the state and to specify requirements and limitations with relation to such operations.
    
    The taxation subsection language of the proposed bill should be cross-referenced in Chapter 11 of the W.Va. Code. The proposed W.Va. Code §17-29-19(d)(2) and W.Va. Code §17-29-19e(6) are in conflict.
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov